0MCATCFigure 11.4.2MRQuantityRefer to Figure 11.4.2, which showsthe cost curves and marginal revenuecurve of a firm in a perfectlycompetitive market. In the long runfirms will exit the market.O firms that remain in the market willexpand production.market supply will decrease.firms that remain in the market willdecrease production.market demand will increase.

The model represented here is the cost structure of a firm in a perfectly competitive market and it…

P₁ MC ATC Figure 11.4.2 MR Quantity Refer to Figure 11.4.2, which shows the cost curves and marginal revenue curve of a firm in a perfectly competitive market. In the long run O firms will exit the market. O firms that remain in the market will expand production. O market supply will decrease. O firms that remain in the market will decrease production. O market demand will increase.

P₁ MC ATC Figure 11.4.2 MR Quantity Refer to Figure 11.4.2, which shows the cost curves and marginal revenue curve of a firm in a perfectly competitive market. In the long run O firms will exit the market. O firms that remain in the market will expand production. O market supply will decrease. O firms that remain in the market will decrease production. O market demand will increase.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Suppose a firm is in a perfectly competitive market. 10 Price 9- 8 4.5³ 3.5 MC ATC AVC 123 4 5 6 7 8 Quantity Suppose currently price is $6, what will happen in the long run? O Nothing. The price is consistent with zero economic profits, so there is no incentive for firms to enter or exit the industry. O Individual firms will earn positive economic profits for now, which will entice other firms to enter the industry in the long run. O Individual firms will earn negative economic profits for now, which will cause some firms to exit the industry in the long run. O Because the price is below the firm's average variable costs, the firms will shut down.
MC АТС $25.00 AVC $19.50 $15.00 $12.50- 30 40 50 60 Output (Q) The Short Run Supply Curve for the firm shown in the diagram above is its MC curve for any price greater than $12.50 $25.00 $15.00 $19.50
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Question 14 Figure 1 Use this figure for questions 14-20. This figure shows costs for a firm in a perfectly competitive market. Price MC 175 ATC AVC 125 100 80 270 322 515 Quantity Referring to Figure 1, suppose the price of the good is $175. If the firm produces and sells 515 units of output, its total revenue is (leave out the dollar sign)
$50 ATC $45 MC $40 $35 P= MR $30 AVC $25 $20 $15 $10 $5 $0 25 50 75 100 125 Output (Q) The diagram above shows a Perfectly Competitive firm in the short-run. This firm will maximize its profit by choosing the Output (Q) level: Select one: O a 60 O b. 100 O c. 75 O d. 50
Question 12 Examine the graph below. Assume this firm is producing at its profit-maximizing output. In the long run, if prices remain as shown here, this firm will SA MC ATC 13 12 11 10 AVC 6 6 0 3 8 0 12 15 18 21 q stay in the market and make a profit have zero economic profit O exit the market shut down have losses equal to fixed costs 9 B 7
Question 25 Use the graph below to answer the following question: MC AVC # Q5 P4 P3 Ⓡ P2 ↑Price P1 Q1Q2 Q3 Q4 ATC Quantity If the market price is less than P3 and greater than P2, in the short run, the perfectly competitive firm will earn O positive economic profit zero economic profit. O negative economic profit and shut down. O negative economic profit but continue to produce output.
In the long run, competition among sellers results in all of the following EXCEPT O increases in the price investment increases in the quantity O innovation
am. 122.
QUESTION 25 Strawberries, a normal good, are produced in a perfectly competitive market. Average consumer incomes increase. This will cause the individual strawberry farmer's marginal revenue to and their profit-maximizing level of output to O increase; increase increase; decrease O decrease; increase O decrease; decrease
A mattress company operates in a perfectly-competitive environment. If the firm can increase its profits by increasing output, O price is greater than marginal cost. O price is less than marginal cost. O price is equal to marginal cost. losses are minimized.
Options: a, Rise, fall or remain the same b, Rise, fall or remain the same